Agriculture Remains a Great Return on Investment04/24/2017
Tax season is finally over, and naturally many of us are thinking about how our checks to Uncle Sam will be spent in the upcoming year. Here’s a hint: Not very much will be going to the farm.
In fact, for every $100 spent by the Federal government, less than 25 cents actually goes to underpin the country’s food and fiber system. That’s a tremendous return on investment, according to Dr. Mechel “Mickey” Paggi, an economist with National Crop Insurance Services.
“Everybody in America eats and I think we probably have the best deal out there in terms of our food,” said Paggi in a recent interview with the National Association of Farm Broadcasters.
He noted that overall spending on farm policy is about one quarter of one percent of the federal budget. And as America’s farm policies have evolved, taxpayers are saving more and more thanks, in part, to crop insurance’s unique cost-sharing structure, Paggi explained.
“Taxpayers benefit because farmers are active participants in (crop insurance). They have skin on the game. … Farmers have to pay a premium to get protection,” he said.
All told, farmers have spent nearly $50 billion out of their own pockets since 2000. Farmers also must shoulder at least 25% of any loss before they get an indemnity.
In addition, private sector crop insurers pay indemnities from their own coffers on most claims, thus minimizing taxpayer cost.
“It’s a far cry from the old days of the ad hoc disaster bills, where taxpayers were on the hook for 100% of the payout,” Paggi told farm radio listeners.
Since the 2014 Farm Bill took hold, crop insurance has come in more than $3 billion under budget.
“There’s no secret as to why we hear leaders in both the industry and in Congress saying that we need to keep a positive attitude and a strong crop insurance program going into the next Farm Bill,” Paggi concluded.
Source: National Crop Insurance Services